Despite the lowest mortgage rates of all-time, home buyers are slowing the pace at which they’re buying homes.

According to the National Association of REALTORS®, on a seasonally-adjusted basis, the Pending Home Sales Index fell 1 percent in August.

The Pending Home Sales Index measures homes under contract, but not yet sold, nationwide. In this respect, the Pending Home Sales Index is a forward-looking housing market indicator; a predictor of future home sales.

It’s one of the few national indices that “looks ahead” to future market conditions. Most housing data, by contrast, describes past events.

On a regional basis, only the South Region showed improvement in August’s Pending Home Sales Index report :

Northeast Region: -5.8%

Midwest Region : -3.7%

South Region : +2.6%

West Region : -2.4%

That said, even the value of regional data can be questioned. Like all things in real estate, the number of homes going under contract will vary on the local level.

For example, in the Northeast Region where pending home sales slipped in August, there are close to a dozen states. Some of those states performed better than others, and there is no doubt that cities and towns exist in the region in which pending home sales actually climbed.

As a national/regional report, the Pending Home Sales Index cannot show local market data and, for that reason, it’s somewhat irrelevant to everyday buyers and sellers in Rancho Santa Margarita. If you’re in the market to buy or sell a home today, it’s your local housing market data that matters to you.

We watch the Pending Home Sales Index because it paints a broad picture of housing nationwide. To get local market conditions, though, you’ll want to talk with a local real estate professional.

Standard & Poors released its monthly Case-Shiller Index this week. The Case-Shiller Index measures home price changes from month-to-month, and year-to-year, in 20 select U.S. cities. It also reports a “national” index; a composite of the values in said cities.

The most recent Case-Shiller Index shows a 0.9% rise in home values from June to July 2011. Home values were higher in 17 of the 20 tracked cities. Only Phoenix and Las Vegas fell. Denver was flat.

Also noteworthy is that, of all of the Case-Shiller cities, Detroit posted the strongest 1-year, home price improvement. As compared to July 2010, home values are higher by 1.2 percent in Detroit. This bests even Washington, D.C. — long-believed to be the nation’s healthiest housing market.

That said, we should be careful of the conclusions we draw from July’s Case-Shiller Index — both on a city-wide level, and on a national level. This is because, as with most “home price trackers”, the Case-Shiller Index has flaws in its methodology.

The first Case-Shiller Index flaw is its limited scope. Although it’s purported to be a “nationa”l housing index, the data that comprises the monthly Case-Schiller Index is sourced from just 20 U.S. cities. These 20 cities represent just 0.6% of the more than 3,100 municipalities nationwide.

The second Case Shiller Index flaw is that the sample sets include single-family, detached homes only. iCondominiums, multi-unit homes, and new construction are specifically excluded from the Case-Shiller Index.

In some markets, “excluded” home types outnumber included ones.

And, lastly, the Case-Shiller Index is flawed in that it takes 2 months to gather data and report it. It’s nearly October, yet we’re still discussing the real estate market as it existing in July. For buyers and sellers in Trabuco Canyon , July in ancient history.

The Case-Shiller Index is useful for tracking long-term trends in housing, but does little to help individuals with their choices to buy or sell a home. For relevant, recent real estate data, talk to a real estate agent in your market. Real estate agents are often the best source for real-time, real estate data.

According to the Census Bureau, the number of new homes sold slid for the fourth straight month in August, easing 2 percent from July. On a seasonally-adjusted, annualized basis, home buyers bought 295,000 newly-built homes last month.

August marked the lowest new home sales tally since February. News outlets are jumping on the story, with at least one calling it a “blow” to the housing market.

That’s an unfair assessment.

It’s tough for the new home market to tally big sales numbers when the number of homes for sale is dwindling and, in August, that’s exactly what we saw. The number of new homes for sale nationwide fell to 162,000 last month. This is the fewest number of new homes for sale since at least 1993, the first year the Census Bureau tracked such data.

In other words, using New Home Sales as a housing market gauge may be misleading. A better metric may be new home supply.

In August, new home supply edged 0.1 months higher to 6.6 months. This means that, at today’s sales pace, the complete new home inventory would be sold out in 6.6 months.

It’s the second-fastest reading in 2 years.

The new home market represents an interesting opportunity for home buyers in Trabuco Canyon. Builders are facing new competition from bank-owned homes and foreclosures, dragging builder confidence to all-time lows. Furthermore, builders have low expectations for the next 6 months.

As a buyer, you can use this to your advantage. Builders may be more willing to negotiate on price and finishes versus this time last year. You may find a good “deal” in new construction once you go in search of it.

According to the National Association of REALTORS®, Existing Home Sales rose 8 percent in August from the month prior, and 19 percent as compared to August of last year.

“Existing homes” are homes that are previously owned; ones that cannot be considered new construction.

A total of 5.0 million existing homes were sold last month on a seasonally-adjusted, annualized basis. This is slightly better than the 12-month home resale average, a statistic partially powered by “distressed sales”. Distressed homes — homes in various stages of foreclosures or sold via short sale — accounted for 31 percent of all home resales in August.

At the current rate of sales, the national home resale inventory would be depleted in 8.5 months. This pace is a full month faster as compared to July, and the lowest home supply reading since March 2011.

Real estate investors bought 22% of homes in August, up from 18% in July

Home prices throughout Trabuco Canyon are based on Supply and Demand and, at least right now, it appears the supply is dropping. Furthermore, with mortgage rates at all-time lows, it’s reasonable to expect demand to pick up. These two conditions should lead home prices higher.

If you’re shopping for a home right now, recognize the trends and work them to your advantage. It may be “cheapest” to buy now.

Mortgage markets improved last week as the Federal Reserve provided new market stimulus and the Eurozone continued to grapple with Greek’s sovereign debt issues.

Conforming mortgage rates fell in California last week overall, dropping for the second straight week.

For rate shoppers, the best day on which to lock a mortgage rate last week proved to be Thursday.

Fresh off the Federal Reserve’s Wednesday afternoon announcement that the group will launch a $400 billion program in support of longer-term bonds, mortgage rates fell. This occurred because mortgage rates are based on the price of mortgage-backed bonds, and mortgage bonds are a beneficiary of the Fed’s new program.

Those gains were short-lived, however, because Friday morning, when the market opened, mortgage bonds were deteriorated, and that momentum carried through to the afternoon.

By the time the markets closed for the weekend, nearly all of the Fed-led gains had been drained from mortgage bonds.

Within a matter of 48 hours, the average 30-year fixed-rate mortgage rates had plunged — then surged — 0.250 percent.

The speed at which rates changed underscores how tough it can be to shop for a mortgage these days. If you were quick on Thursday, you locked your rate at its low. If you “slept on it”, though, or even took too much time to think, you not only missed the best mortgage rates in more than 50 years, you missed it by entire quarter-percent.

On a $200,000 mortgage, that’s an approximately monthly payment difference of $30 per month.

This week, mortgage rates should be similarly volatile. There is a lot of economic news set for release, and the Eurozone is rumored to have a plan to save Greece from debt default. Depending on the strength of said data, and the passage of a Greek default plan, just how mortgage rates will change is unknown.

If you’re shopping for mortgage rates, the safe path is to lock what you can. Mortgage rates may fall this week, but what if they don’t? Rates have a lot farther to rise than to fall.

Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.

A “Housing Start” is defined as a home on which ground has broken.

We shouldn’t put too much faith in the findings, however. Although housing starts were lower last month, as noted by the Census Bureau, the margin of error in the August Housing Starts report exceeded the actual result.

From the official report:

August’s Published Results : -1.4% from July

August’s Margin of Error : ±10.3% from July

Therefore, August’s Housing Starts may have actually increased by up to +8.9% from July, or it may have dropped as much as -11.7%. We won’t know for sure until several months from now, after the Census Bureau has gathered more housing data.

One thing is certain, though — the long-term trend in Housing Starts is “flat”. There has been little change in new home construction since last summer.

The same can’t be said for Building Permits.

Considered a pre-cursor to Housing Starts, Single Family Building Permits climbed 2.5 percent with a minuscule Margin of Error of ±0.9 percent.

When permits are issued, 86 percent of them begin break ground within 60 days. Therefore, expect Housing Starts and new home inventory to rebound in the months ahead.

For now, housing remains steady. And, with mortgage rates at all-time lows, homebuyer purchasing power in an around Rancho Santa Margarita is higher than it’s been in history. If you’re in the process of shopping for a home, talk with your lender to plan your mortgage budget.

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn’t been 3 FOMC dissenters since 1992.

In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:

Economic growth “remains slow”

Unemployment rates “remain elevated”

The housing sector “remains depressed”

The Fed also said that there are “significant downside risks” to the economic outlook, tied to strains in the global financial markets.

The news wasn’t all bad, however.

The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013”. This means that Prime Rate — the rate to which credit card rates and lines of credits are often tied — should remain unchanged at 3.250 for at least another 2 years.

Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in California are improving, but note that Wall Street sentiment can shift quickly — especially in a market that’s as uncertain as this one.

Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 7-3 — the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn’t been 3 FOMC dissenters since 1992.

In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:

Economic growth “remains slow”

Unemployment rates “remain elevated”

The housing sector “remains depressed”

The Fed also said that there are “significant downside risks” to the economic outlook, tied to strains in the global financial markets.

The news wasn’t all bad, however.

The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013”. This means that Prime Rate — the rate to which credit card rates and lines of credits are often tied — should remain unchanged at 3.250 for at least another 2 years.

Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.

Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in California are improving, but note that Wall Street sentiment can shift quickly — especially in a market that’s as uncertain as this one.

The Federal Open Market Committee adjourns from a two-day, scheduled meeting today, the sixth of 8 scheduled meetings this year, and the seventh Fed meeting overall.

The FOMC is a designated, 12-person committee within the Federal Reserve, led by Fed Chairman Ben Bernanke. The FOMC is the voting members for the country’s monetary policy. Among its other responsibilities, the FOMC sets the Fed Funds Rate, the overnight rate at which banks borrow money from each other.

Note that the “Fed Funds Rate” is different from “mortgage rates”. Mortgage rates are not set by the Fed. Rather, they are based on the price of mortgage-backed bonds, a security traded among investors.

As the chart at top illustrates, the Fed Funds Rate and conforming mortgage rates in Coto de Caza have little correlation. Since 1990, the two benchmark rates have been separated by as much as 5.29 percent, and have been as close as 0.52 percent.

Today, the separation between the Fed Funds Rate and the national average for a standard, 30-year fixed rate mortgage is roughly 4 percent. This spread will change, however, beginning 2:15 PM ET Wednesday. That’s when the FOMC adjourns from its meeting and releases its public statement to the markets.

There is no doubt that the Fed will leave the Fed Funds Rate in its current target range of 0.000-0.250%; Fed Chairman Bernanke plans to leave the benchmark rate as-is until at least mid-2013. However, the Fed is expected to add new support for markets.

Unfortunately, there are few clues about how the Fed will support markets, and there is no consensus opinion regarding the size of the said support. As a result, mortgage rates should be bouncy today. First, they’ll be volatile ahead of the Fed’s statement. Then, they’ll be volatile post-Fed statement.

Even if the Fed does nothing, mortgage rates will change. This is because Wall Street is prepping for an announcement and — no matter what the Fed says or does — investors will want to react accordingly.

When mortgage markets are volatile, the safest move is to lock your mortgage rate in. There too much risk to float.

Homebuilders are feeling worse about the market for new homes nationwide.

With construction credit tight and competition from foreclosures increasing, the National Association of Homebuilder’s Housing Market Index slipped 1 point in September, falling to levels just below the index’s 12-month average.

The HMI measures homebuilder confidence nationwide. It’s the result of 3 separate homebuilder surveys, each designed to measure a specific facet of the homebuilder’s business.

How are market conditions for the sale of new homes today?

How are market conditions for the sale of new homes in 6 months?

How is prospective buyer foot traffic?

Each component survey showed a drop-off from August. Responses fell 1 point, 2 points, and 2 points, respectively. Together, September’s composite reading was 14 out of a possible 100 points. Readings over 50 are considered favorable.

The HMI not been above 50 since April 2006.

With homebuilder confidence low — and stagnant — buyers of new homes Rancho Santa Margarita in should remain alert for “deals”. Builders are more likely to offer free upgrades and other concessions to incoming buyers. The availability of such deals may increase as the seasons change and as the year comes to a close.

Low mortgage rates are making new homes attractive, too. Last week, 30-year fixed rate mortgage rates fell to their lowest levels of all-time. As compared to just 8 weeks ago, 30-year fixed rate mortgage payments are lower by 5 percent at all loan sizes, down $27 per month per $100,000 borrowed.